DFW Real Estate Market Update December 2022

Hey there, Dallas-Fort Worth

In the last few videos I’ve been talking about what the news is saying. 

I’ve quoted news articles but then gave you data to explain what’s really happening.

Well this month I’m going to talk about what the news is NOT telling you. That’s right. So, let’s say you’re at a holiday party you can bring up some valuable points about the market that no one else is talking about. Because everyone is talking about the market but they’re not talking about this.

Keep reading so you can be the smart one in the room when the topic of real estate comes up..

Hi there, I’m Jennifer Shannon. I’m a Realtor with Keller Williams and as always we’ll get in to the month over month sales data but, like I said in the intro, this month I want to talk about what the news isn’t talking about when it comes to our market.

It’s resilience. That’s right. Okay, I already know that some of you are hot on it to write a comment to this video that I’m being too much of a pollyanna about the market. Serving my own interests. 

Well, there’s opinion and then there’s data. I’m using data. The most recent data anyone has available and it’s data actually from the MLS. Our MLS. I’m also using data from the Federal Reserve, Freddie Mac, and a new one for today, The Federal Reserve Bank of New York. Not some source that surveys a bunch of people to get a “read” on the market or random YouTubers who make money by telling you what you want to hear. 

Here’s why I am so positive.

First, I have a new metric for you: The Global Supply Chain Pressure Index. Simply put, it tracks the state of global supply chains. It was created by the the research group for the Federal Reserve Bank of New York. 

Now we have heard for a long time that the supply chain has been in distress. The way this index works is, the further we are from zero, the worse off the supply chain is. In December 2021, the supply chain pressure was the highest it has been on the 25-year data range of the index. It was 4.3.

The index has come down a lot this year and we are now sitting at a GSCPI of 1.2.

This tells us a lot of supply chain issues have improved.

This affects inflation because when there are supply chain issues and we have a limited supply of goods, prices are driven up. When the price of items go up, our inflation numbers go up.

The FED is working to bring inflation down by increasing the Federal Funds Rate. Their goal is to make borrowing money more expensive so people slow down on their spending.

Well, the closer our inflation numbers get back to the target rate of 2%, then the FED will lighten up on their rate increases. This will have a trickle down affect on mortgage rates. And as mortgage rates go lower, we’ll get more buyers in the market. 

So for those who are waiting for the market to bottom out and for prices to go lower, well, if demand goes up, prices are going to follow. You could argue it’s a gamble either way, but I am consistently seeing data, month after month, that supports a positive outlook on the market.

As some have mentioned in the comments of previous videos, there are a few negative things to be mindful of and keep an eye on. 

There’s the fact that income growth is not keeping up with the rate of inflation and the rate of home price increases. 

There’s also the fact that many industries are preparing for a recession to happen in 2023.

So what happens to the market if we go into a recession?

If a recession does happen, then it’s likely we’ll see mortgage rates go down since that typically happens when the US economy is weak.

If a recession happens, we won’t have a flood of homes hit the market either.

There won’t be a foreclosure crisis. According to CoreLogic, homeowners now average $300,000 of equity in their homes. If the economy tanks, many people will be able to tap into that equity to get through the headwinds of a recession.

We’re also still going to have inventory issues next year because builders are pulling back on production in preparation for a rough 2023. Builder confidence has been on the decline for 11 mon0ths in a row and permits are down. 

So it’s kind of interesting how this market is positioning itself to withstand a recession.

Okay, enough recession talk. Let’s get back to the good news and that’s with interest rates. For five weeks in a row, mortgage rates have decreased according to data published by Freddie Mac. They’re currently at 6.31% for a 30-year fixed rate mortgage.

The latest data from the Mortgage Bankers Association says that application volume increased 3.2% week-over-week.

And the headline for our local market data is that pricing is flattening out. 

For our local numbers, I’m looking at sales data from November from our entire MLS.

The average sales price did go down last month by .7%. It was a difference of $3,130. Our current average sales price is $441,942 which puts us up 10.2% year-over-year.

But there are submarkets that have month-over-month increases.

Frisco’s average went UP $99,218

Garland went up $24,340

Rockwall went up $8,780

These are just three random cities I plugged in and they all have positive month-over-month growth. 

New listings went down again to 9,829 homes. We have 4.4% fewer new listings than this time last year.

The overall number of homes for sale took a big leap from last year with a 77.7% increase and we currently have 27,847 homes for sale. 

We’re still below our pre-Covid level of inventory when we had 41,655 homes for sale in October 2019.

We now have 2.8 months of inventory. In November of 2019 we had 4.1 months of inventory.

The time it takes for a home to go under contract is an average of 42 days, up six days from last month. In November 2019, it took an average of 57 days before homes went under contract.

Our average sales price per square foot for DFW dropped to $195 per SqFt. It’s up 8.3% from last year.

The amount homes are selling for as a percentage of the original asking price has dropped for the seventh month in a row and is now averaging 94.5% of the asking price. In November 2019 homes were selling for 95.1% of their asking price.

Just as we’ve seen over the last few months, our numbers aren’t far from our pre-covid levels and in the past I’ve used the word ‘normalizing’ quite a bit. My buzzword for this month is ‘plateauing’. 

For you prospective buyers out there who have been sitting out, ready for prices and rates to go down, you might really start thinking about your timing. In last months video I talk about 2-1 buydowns and there are even 3-2-1 buydowns which could put your payments at an interest rate in the 3’s for the first year. So you can go watch that video or reach out to me to get more information.  We work with buyers who are just starting out all the way to estate purchases and we have sold everything from historic homes up to new construction. Let’s hop on a call to get started and you can reach me by phone or text at 214-803-4444 or start with an email to jshannon@kw.com

And sellers. The indicators are pointing to more buyers possibly coming into the market which could make for a great spring selling season. The market is back to being competitive and the presentation of your home is critical. You can no longer just put a sign in the yard, pick your price, and get listed on the MLS.

This is why we put a lot of focus into how your home is presented, promoted, and positioned. That means bringing in a home stager and even bringing in furniture for select listings if needed. Creating a website for each of our listings. Hiring a professional photographer. Producing a video. Buying digital ads and so much more.

Our team has closed 262 deals worth over $120 million this year alone. We know what it takes to get homes sold in this transitioning market and leverage all these lessons learned for the benefit of our clients.

So if you’re ready to get started on selling or buying your home, just reach out to me by phone or text at 214-803-4444 or by email at jshannon@kw.com. I’d love the opportunity to interview with you to earn your business.

Well Dallas Fort Worth, that’s all I have for this month’s update. If you like getting this information, be sure to like, subscribe, and comment to let me know what you thought of this video. I look forward to updating you next month on what’s happening in our real estate market. And for that update I’m going to talk about my predictions for 2023 and what the market looks like if we go into a recession and what it looks like if we don’t. You won’t want to miss that video. So until then, have a Merry Christmas and happy holidays.

Bye now!